Monday, August 27, 2018

Crain's to Amazon. Won't you please come to Chicago. We've got cheap labor.

"Chicago's low pay scales and big labor pool rank it tops for Amazon's HQ2", says Crain's.
Crain's let the cat out of the bag about Chicago's pitch for Amazon's HQ2. We already knew that Mayor Rahm Emanuel and Gov. Bruce Rauner were offering Amazon over $2B in tax incentives and prime city real estate to move their second headquarters here.

In return, Chicago was supposed to get 50,000 new "high paying" jobs. I don't know how many people actually believe the mayor's B.S. Looking at his and Rauner's poll numbers, there's probably not very many. But if you are one of them, please take a look at the Crain's Chicago Business above-the-fold story this week. It will reveal that the real pitch city corporate leaders are making to Amazon CEO and world's richest man, Jeff Bezos is cheap labor.

According to Crain's, Amazon is more cost-sensitive than most tech companies since it imposes a strict cap on salaries and Chicago can offer Bezos a large skilled labor pool that includes research analysts, techies, and mid-level managers who are among the lowest-paid in the nation.
Chicago also has seen lower wage inflation than many HQ2 semifinalists. Last year, annual pay here rose 1.6 percent, half the rate in Seattle. It's the silver lining in the cloud that has been hanging over the Chicago economy for the past decade. Relatively slow growth in wages and housing values frustrates people already here, but it looks good to employers and employees being squeezed hard by inflation. 
 High-paying tech companies in a small market can drive up wages for nontech jobs, too. Managers in administrative services, HR, training and development, marketing, and sales cost 10 to 19 percent more in Austin than Chicago. Tech-sales workers make 50 percent more in Austin, and market research analysts make 35 percent more. 
In other words, the mayor is selling Chicago's workers to Bezos at a cheap price and without (he hopes) bothersome unions. But the city doesn't need and shouldn't want a company that comes here on those terms.

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